$40 million of public money is being spent every year subsidising foreign PhD students but they are less likely to remain in New Zealand following their studies than any other group of international students.

The director of Universities New Zealand hopes foreign PhD students will be able to go back to their home country and be ambassadors for New Zealand. Photo: 123rf

The government has been subsidising foreign PhD students as if they are locals since 2005.

The Tertiary Education Minister, Paul Goldsmith, said the goal of the policy was to attract more PhD students and add to the pool of potential temporary or permanent residents with advanced skills.

He said on that count it had been successful, with the number of foreign PhD candidates increasing from 695 in 2005 to more than 4000 by 2015.

Mr Goldsmith said the government had spent $267.3 million on the policy from 2005 to 2015, and government documents showed more than $40m was spent last year with a similar amount forecast for 2017.

He said the students directly contributed to New Zealand's knowledge base and could help raise research productivity and the academic impact of universities.

Mr Goldsmith said New Zealand benefited even from students who went back to their home countries.

"Those students who return overseas continue to provide value through increased academic linkages, as advocates for New Zealand, and potential business opportunities," he said.

"There are no immediate plans to change the policy settings, but 12 years on I do intend to have a stocktake of the programme to ensure that it represents a good outcome for the investment made."

The director of Universities New Zealand, Chris Whelan, said foreign PhD students' research was of direct benefit to New Zealand.

"Their thesis topic is invariably on something that's relevant to New Zealand, about 70 percent are actually in areas like science, technology, agriculture, and they're working on usually quite applied problems that are relevant to our economy," he said.

Mr Whelan said each PhD student spent on average about $175,000 on things like accommodation and fees during the three years they were studying so they were also good for the economy.

He said New Zealand also benefited from students who went home because they could provide strong, long-term links with their other countries.

"We want people to know New Zealand and to go back to their home countries because they're ultimately the ambassadors that will work with our researchers in the long-term," he said.

The president of the Tertiary Education Union, Sandra Grey, said it was good for universities to have top students from around the world.

She said there was not much the government could do to persuade more of the students to stay and work in New Zealand.

"We are a relatively low-wage economy. We don't have the types of wages other markets can provide," she said.

"There are others who come in specifically to learn knowledge to take back to their home country, which is a really important contribution we make particularly to the Pacific region."